Neptune’s Robin Geffen sees cycle leading to income growth

By: Jonathan Boyd | 09 Dec 2011

Income funds are set to reap improved yields from higher dividends, buybacks and M&A activity because of the state of companies at this stage in the economic cycle, said Neptune CEO and fund manager Robin Geffen.

Speaking about the UK income products he helps run, Geffen said his outlook for 2012 was positive for those who are looking for buy-and-hold income opportunities.

He said if the economic cycle were to move to a stage in which the “steady Eddies” – companies that can produce stable and growing returns for income fund investors – are starting to be bought, this would suggest the beginnings of a bull market.

The acquisitions are being fuelled by overseas investors into UK firms, or private equity buying.

Turnaround stories are also emerging, such as Unilever, as well as tactical plays. Geffen said he prefers Norway’s Statoil to BP because the latter still has a litigation hangover from the disaster in the Gulf of Mexico and its deal to access Russian assets via Rosneft has fallen through. The firm’s oil price through 2011 reflects expectations of economic growth next year, especially in emerging markets.

UK firms in particular are expected to provide dividend growth next year, to enter into M&A or share buybacks, because they have cash, he said.

Balanced fund

Geffen also noted that he had started reducing his cash position in the balanced fund he manages.

One of the reasons is the strength of non-OECD consumers is being underestimated, he said.

This consumption is also being affected by increasingly discretionary spending, for example, women buying known cosmetics brands rather than generics, or the likes of Apple in technology, or UK firm Burberry in clothing.